Top US economic forecasters are growing increasingly worried about the impact of surging oil prices on consumer and business spending in 2005, a survey released on Sunday showed.
However, most of the 51 economists polled by the Blue Chip Economic Indicators survey raised their estimates for 2004 growth after the Commerce Department revised up second-quarter gross domestic product growth to a 3.3 percent annual pace from a previously reported 2.8 percent.
The economists also cited optimism about third-quarter consumer and construction spending.
"A sharp upward revision in the government's estimate of personal consumption expenditures in July and a solid rise in September vehicle sales hint of a sizable acceleration in consumption during Q3 despite disruptions along the east coast due to repeated hurricanes," the newsletter said.
The consensus forecast for 2004 growth rose to 4.4 percent from a 4.3 percent estimate in September's newsletter. Some 55 percent of the forecasters raised their estimates for GDP growth in 2004.
For next year, the consensus growth estimate slipped to 3.5 percent in the October survey from 3.6 percent in September.
The newsletter said the recent oil cost surge that sent crude past $53 a barrel last week had come as a "major surprise" to economists. As recently as last month, the concensus view was that crude prices would fall back to around $40 a barrel by the end of this year.
"However, soaring demand due to the strongest global economic growth in a generation, and a variety of events that have served to constrain supply, are now making analysts at least consider the possibility that energy prices may remain elevated well into next year," the newsletter said.
It said higher energy prices are the latest in a mix of factors that economists had already expected to slow growth next year - including higher interest rates and less stimulative fiscal policy.
Even so, the newsletter said analysts remain confident that accelerating job and wage growth will keep consumer and corporate spending rolling and that GDP growth would only slow to a pace of 3.5 percent to 4 percent in 2005.
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